Abstract
We are presenting to you an analysis of the relationship between crime rates
and unemployment rate and population rate. An increase in unemployment or
during the time of a recession, it is observed that the rate of criminal and
illegal activities spikes. The economic concept of autonomous consumption is
of significance here. We know that human beings somehow satisfy their very
basic requirement either through distorting their savings, selling their assets,
borrowing, stealing or even by indulging themselves in unsound and illegal
activities. However, we here do not try to establish that the crime rates are
solely caused by unemployment and only the not so well-off people with no
source of income perform these. We all are very well aware that the mafia and
other huge criminal activities are in most cases controlled and headed by the
over-wealthy. Given other things constant, it is observed that an increased
unemployment
Introduction
We are all affected by crime, no matter how big or small it is. It has an impact
on all of us. There is crime everywhere. It has a stronghold on news
programmes and newspapers. It also consumes the majority of TV
programmes and films. There are also a lot of fiction novels and books.
Controlling and combating crime is critical for citizens' protection. In addition,
how a government handles crime and deals with criminals has a significant
impact on its legitimacy and influence. The rising crime rate is disturbing and a
source of concern for many people around the world. While some people
advocate for successful crime-fighting methods, others believe that crime
cannot be eradicated.
Crime is a very old concept that has been passed down through the
generations. Crime brings about a state of law and order. It's a social blight. It
is created by society, and society suffers greatly as a result of crime committed
by its members. The public is concerned about the rising tide of crime
nowadays. Today, no one is safe. Criminals abound in the globe today, and
criminal activity is on the rise everywhere. Crime is defined as antisocial and
illegal activity that has a penalty. This anti-social activity is frowned upon by
society and is criminalised.
Broken or dysfunctional households are the leading cause of juvenile
delinquency and crime, according to numerous studies. To make money, some
children from low-income families may resort to criminal behaviours such as
stealing, robbery, mugging, and other forms of violence. They frequently
establish delinquent gangs in the beginning, which might evolve into mafia or
underworld groups over time.
Literature Review
1) Identifying the Effect of Unemployment on Crime; September 1998; The
Journal of Law and Economics 44(1) DOI:10.2139/ssrn.145790
This paper aims at finding the relationship between increase in unemployment
rate and its direct effect in the crime rate during the 1980s, before the Indian
economy opened its gates for globalisation in 1991.
2) This is a repository copy of Examining the link between crime and
unemployment: a time-series analysis for USA. White Rose Research
Online URL for this paper: [Link]
This paper studies the growth of crime along with unemployment and
performs a detailed analysis with respect to time.
3) Crime, unemployment, and society in USA; insights from rape data
Kamala Nehru College, University of Delhi, New Delhi, India.
Using econometric tools, this is being done to see if there is a positive or
negative relationship between unemployment and crime, specifically rape.
Three important findings arise. To begin with, there is a link between rape and
unemployment in India. Second, literacy rates have a positive coefÏcient,
implying that literacy promotes reported rape rather than actual rape. Third,
favourable gender advances have a significant impact on female-on-female
violence.
4) According to Gary Becker (1968), economic agents calculate a cost-
benefit analysis while deciding whether or not to commit a crime.
Economic motivations to commit crime have been studied, as well as the
influence of unemployment on these economic incentives to commit
crime.
Variables
a) Crime rate- dependent variable
The crime rate is the ratio between the number of felonies and
misdemeanours recorded by the police and gendarmerie and the population in
[Link] layman's terms, a crime is an illegal conduct that is penalised by the
state or another authority. In modern criminal law, there is no simple and
universally agreed meaning of the term crime, however legislative definitions
have been supplied for specific purposes. The most widely held belief is that
crime is a legal category; in other words, something is a crime if the relevant
and
applicable law declares it to be so. A crime or offence (or criminal offence) is an
act that is harmful not only to an individual but also to a community, society,
or the state, according to one proposed definition. Such behaviour is
prohibited and penalised under the law. The idea that acts like murder, rape,
and theft should be outlawed exists all around the world.
b) Unemployment rate- independent variable
The unemployment rate is the percentage of people in the labour force who
are unemployed yet actively looking for work. This statistic excludes people
who have not sought for job in the previous four weeks. It's vital to remember
that the rate refers to the percentage of jobless job seekers in the labour force
—that is, the total number of employed and unemployed people—rather than
the overall population.
c) Population- independent variable
The total number of people living in a certain region is referred to as
population. Population data allows us to estimate the number of people on the
planet and plan our actions accordingly. For example, if we know the
population of a city, we may predict how many resources it will require and
population rate is followed by an increase in crime rate
REGRESSION
ONE DEPENDENT AND ONE EXPLANATORY VARIABLE
LINEAR MODEL – 1
Interpretation:
Crime rates and Population Size
Y: Crime rate
X: Population size
Y=B1+B2+ui
Y=b1+b2X2, where b1∧b2are the estimators of B1∧B2 respectively
1. Apriori Expectations.
Here apriori expectations are positive because as the population increases
crime
rates are expected to increase.
2. Running the regression by OLS Method:
Model 1: OLS, using observations across all states Of United States of America
for
According to the regression run by OLS method, it can be seen that the estimated
coefÏcients are:
b1: 2.02171
b2: 0.25549
b1 is the intercept coefÏcient. It represents the average level of crime rate
when the population in the state would be zero. However, the population has not
been zero in any state.
b2 is the partial slope coefÏcient. It is positive which indicates that as the
population in the state increases, on an average the crime rates increase by 0.25549.
This is in accordance with our apriori expectations.
R2 is 18.06% which means that 18.06% of total variation in Crime
Rates around its mean value is explained by Population Size.
5. ANOVA Table
Df Sum of squares Mean square F value Pr(>F)
LgPR 1 4.546 4.546 10.8 0.00188
Residuals 49 20.618 0.421
Total 50 25.164
To check whether model is significant or not:
H0:R2=0
Ha:R2
is not equal to zero P – value: 0.00188
We can see from ANOVA table that the p value is lesser than 0.05. We reject the null
hypothesis at 5% level of significance. Therefore, our regression model is significant.
We also have
R2
= 0.1806. This means that approximately 18%of the dependent variable (CR)
is explained by the independent variable (PR).
6. TESTING THE NORMALITY OF RESIDUALS :
The residual has been tested using the Jarque Bera Test.
Jarque Bera Test
Data: Residuals (Reg1)
X-squared = 111.48 df=2 P – value = <2.2e-16
Null hypothesis
H0
: The residuals are normally distributed
Alternative hypothesis
Ha
: The residuals are not normally distributed
The Jarque Bera Test yields the following results:
We observe that the p-value is greater than 0.01 and 0.05. Therefore, we accept the null
hypothesis of normality at both 1% and 5% level of significance.